Markets Overview: (Source: Bloomberg, FT, Reuters, DJ Newswires)

UK 100 Index called to open -15pts at 7370 (-13.7pts ex-div impact), back from yesterday’s flirt with 7400 having successfully completed the pair of bullish patterns we highlighted. Sideways 7370-7380 overnight suggests a pause for breath after yesterday’s rally, waiting to meet back up with 7670 rising lows support from last Friday to continue the up channel from 7225. Bulls would welcome a bounce off this trendline followed by a break above 7380; Bears would like a break below 7370 to put the uptrend at risk. Watch levels: Bullish 7380, Bearish 7370.

A slightly negative UK Index opening call could all be down to ex-dividends given the largely positive US finish, despite Washington in disarray, and gains across the board in Asia overnight.  Higher oil prices are helping, derived from a big US inventory drawdown and supportive OPEC rhetoric boosting sentiment towards key Energy names to help barrel prices overcome ugly multi-week downtrends.  

Japan’s Nikkei  outperforms thanks to Energy and telecoms offsetting weakness in Real Estate and a slightly firmer Yen. Australia’s ASX also embraced gains for Banks and Energy, although Iron Ore breaching an 11-month uptrend on China concerns is a concern while other base metals are bid.

US equity markets closed mixed as the S&P 500 and Nasdaq continued their recent outperformance to post fresh record closing highs, while the Dow Jones closed lower as disappointing Q1 earnings from Disney weighed on the index, offsetting gains for oil major Chevron. It was the energy sector that outperformed on the S&P too as the crude oil price recovery flowed through into equity space.

Note, the first earnings releases from Snap after market close missed analysts’ estimates on both top and bottom lines, sending the share price of the recently public listed tech company sharply lower, trading as much as 25% weaker in after after hours trading. French investment bank Credit Agricole has also announced a tripling of profits in Q1.

Crude Oil prices have taken another leg higher on the back of yesterday’s US inventory data. A surprisingly big drawdown helped ease concerns about rising US production worsening the global supply glut that OPEC cuts are trying to address. US Crude testing $48 clears 16-day falling highs resistance while Brent above the key $50 marker puts behind it a downtrend from mid-April.

Gold continues to bobble around $1220, off its overnight lows, but yet to test yesterday’s highs, the safe haven suffering from a quartet of demand sapping hindrances. Solid risk appetite, buoyant equity markets, the VIX fear gauge hugging record lows and fresh USD strength in the run-up to June’s Fed policy decision (and likely rate hike) are all serving to keep the yellow metal down around 2017 shallow rising support at $1216.

In focus today will be the Bank of England’s ‘Super Thursday’, with its updates on Interest Rates and Asset Purchases, publication of its Quarterly Inflation Report (all at midday). The press conference (12.30) with Governor Carney, will likely garner most attention given it is his first since Article 50 was triggered and in light of recent GBP strength.

Policy is expected unchanged but voting could take a slightly more hawkish tilt (a pair of hawks?) and the Inflation Report will be eyed for how prices are seen developing over the coming years amid conflicting data and in light of the GBP’s rebound.

In terms of data, UK Industrial and Manufacturing Production (9:30am) which is seen weaker in March, adding to that soft data versus hard data debate, the latter struggling to support the latter on many fronts after a strong run post referendum

This afternoon, US PPI offers us the latest insight into US inflation, Producer Prices potentially rebounding in April to bolster the US Fed’s case for another rate hike next month, something markets have pretty much baked in already.

Aside from the BoE, listen out for the ECB’s Constancio at the European open, the Fed’s Dudley late morning and ECB Chief Economist Praet after the European close. The latter could be very interesting after the surprise grilling his boss - President Mario Draghi - got from Dutch politicians yesterday in the Hague yesterday.

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UK Company Headlines: (Source: Reuters/DJ Newswires)

• Oil prices rise on falling US crude stocks, Saudi supply cut to Asia
• BT to cut 4,000 jobs in restructuring after "challenging year"
• On The Beach Group says H1 adjusted EPS up 27.1% to 7.5p
• Zurich Insurance CFO: cost saving target “absolutely achievable”
• Zurich posts Q1 net profit fall on new British reserving rule
• Mothercare says Richard Smothers resigns as CFO
• Keller Group says sold property for £62m
• Stobart Group establishes Stobart Capital to be headed by Andrew Tinkler
• SIG sees decline of leverage in H2 2017
• Aldermore Group posts Q1 net loans up 6% to £7.9bn
• TP ICAP says revenues in 4 months to April £619m
• TP ICAP says completes £270m bulk annuity deal
• Coca – Cola HBC sales up as Russia rebounds
• Mondi posts Q1 underlying operating profit of €252m
• 3I Infrastructure says FY total return £146.3m
• Beazley's Q1 gross premiums written reduced by 2% to $573m
• Heathrow airport sees record April growth
• SuperGroup sees full year profit in line with market expectations
• Gold inches up from 8 – week low as dollar weakens